Bitcoin’s Value Proposition: Shorting Expansionary Monetary Policies

47 Pages Posted: 1 Jun 2021 Last revised: 23 Jun 2021

Date Written: February 2, 2021

Abstract

In this paper I discuss Bitcoin’s defining features that make it a unique asset. I argue that Bitcoin should not be considered as a single purpose asset only, but rather as a new digital financial asset serving several function. In addition to functioning as a means of payment (at least partially) and a diversification tool, I argue that part of Bitcoin’s value proposition stems from its worth as a short position on modern expansionary monetary policies. Indeed, Bitcoin’s value should rise if expansionary monetary policies are maintained, amounting to a tool to short these policies, which should be considered in future attempts to value Bitcoin. I discuss the role of Bitcoin in the traditional financial system, contrast Bitcoin to gold, consider the implications of the continuance of expansionary policies on Bitcoin, and discuss the impact of the emergence of cryptocurrencies as a new asset class on public policies.

Keywords: Bitcoin, Cryptocurrency, Monetary policy, Expansionary policies

JEL Classification: G34

Suggested Citation

Morillon, Thibaut, Bitcoin’s Value Proposition: Shorting Expansionary Monetary Policies (February 2, 2021). Available at SSRN: https://ssrn.com/abstract=3857131 or http://dx.doi.org/10.2139/ssrn.3857131

Thibaut Morillon (Contact Author)

Elon University ( email )

Elon, NC 27244
United States

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